Income-Share Agreements and Innovative Finance

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Description

An Income-Share Agreement (ISA) is an education financing tool through which a student promises a certain percentage of future income (the “income share”) for upfront funding to cover some or all of the costs of the educational program. Typically, each ISA specifies an amount provided for educational costs, a payment term (i.e., maximum amount of time payments would be required), a minimum income threshold below which no payments are due, and a payment cap that—if met—would end the obligation for any future payments. Some providers offer one set of terms for all ISAs, while others vary terms somewhat based on the program and expected postgraduation outcomes.